Introduction

The Gross Receipts Tax

Sales to Qualified Film Production Company

Registration Requirements

Common Questions

Product/Service Chart

Taxpayer Information

For Further Assistance

The 1995 New Mexico Legislature replaced the existing Filmmakers’ Credit with the Filmmaker’s Deduction. Effective July 1, 1996 film production companies could qualify to execute nontaxable transaction certificates to suppliers for most production costs. The intention of this deduction is to promote film production in New Mexico.

The gross receipts tax is a tax levied on businesses in New Mexico for the privilege of engaging in business New Mexico. The gross receipts tax is imposed on the amount of money or other consideration received from selling tangible personal property in New Mexico, leasing tangible personal property used in New Mexico, the performance of a service in New Mexico and the performance of a service (research & development) outside of New Mexico the product of which is initially used in New Mexico. The gross receipts tax is levied on the seller but it is common practice to pass the tax on to the purchaser. Unless a deduction or exemption exists, the receipts from any of the above transactions are taxable under the gross receipts tax.

The only deduction available for filmmaker’s is provided in Section 7-9-86 NMSA 1978. It authorizes the execution of nontaxable transaction certificates (NTTCs) for a series of specified production costs. Not all costs may be deducted. In particular, the catch-all phrase "other direct costs" refer to costs that directly affect the contents of the film. Costs, such as lodging, on-set meals, and cast parties, that do not directly affect the contents of the film are not deductible.

There are three (3) forms that must be properly completed and returned to the New Mexico Film Office in order to receive nontaxable transaction certificates (NTTCs) and benefit from the above deduction.

1. the New Mexico Film Office Film Production Companies’ NTTC Registration Form (this form is required to be notarized);
2. the New Mexico Taxation and Revenue Department Application for Registration; and
3. the New Mexico Taxation and Revenue Department Application for Nontaxable Transaction Certificates.

If your company is already registered with the Taxation and Revenue Department, you will only need to complete the Film Production Companies’ NTTC Registration Form and the Application for Nontaxable Transaction Certificates.

The Type 16 NTTCs are the required documentation for a vendor to claim the deduction under Section 7-9-86 NMSA 1978. One certificate per vendor is required for all valid purchases. It is not necessary to execute a certificate every time a purchase is made; the vendor should maintain the certificate on file for future purchases. The vendor is not responsible for determining whether the purchaser is a qualified film production. If the purchaser is able to produce a Type 16 NTTC, the vendor needs only to verify that the purchase is allowed under the deduction.

The following are some common questions that are being asked by vendors and production companies:

No. These services are not considered to be a direct cost of producing the film. Any deduction claimed by a food services vendor will be disallowed.

No. The leasing of vehicles used for the transportation of actors or members of the crew are not considered to be a direct cost of producing a film.

No. When the gasoline is received in New Mexico the distributor is subject to the gasoline tax, not the gross receipts tax. The gasoline tax is included in the price paid for the gasoline and is not deductible under Section 7-9-86 NMSA 1978.

Yes. The sale or lease of property in New Mexico is subject to the gross receipts tax. If the vendor has received a Type 16 NTTC from the purchaser/lessee the deduction is valid.

No. Lodging is not considered a direct cost of producing a film.

No. The receipts of the vendor are not from transactions that are a direct cost of making a film.

No. Insurance premiums are not subject to the gross receipts tax, but rather an insurance premiums tax. Therefore the deduction under Section 7-9-86 NMSA 1978 does not apply.

Yes. A qualified film production company can purchase electrical services that are performed on a film set with a Type 16 NTTC.

The following chart is a partial listing of the products and services and their deductibility.

The Department offers a variety of taxpayer information. Some information is free and other information must be purchased.

General Information. FYIs and Bulletins present general information with a minimum of technical language. All FYIs and Bulletins are free and available through all local tax offices, the Tax Information and Policy Office and on the Internet. The Taxation and Revenue Department’s Internet address is:

Regulations. The Department promulgates regulations to interpret and exemplify the various tax acts administered by the Department. The Taxation and Revenue Department regulation books are available for $20.00 - $25.00 per volume. The order form is available at all local tax offices and through the Tax Information and Policy Office. Specific regulations are also available at the State Records Center.

Rulings. Rulings are written statements signed by the Department Secretary and approved by the Attorney General that apply to one or a small number of taxpayers. A taxpayer may request a ruling (at no charge) to clarify its tax liability or responsibility under specific circumstances. The request for a ruling must be made in writing, should include not only the details about the taxpayer’s situation, but also identify who the taxpayer is and should be directed to the Secretary of the Taxation and Revenue Department. While the Department is not required to issue a ruling when requested to do so, the Department carefully considers every request. All rulings issued by the department are compiled and available for $25.00 per volume, prepaid. Volumes are available in looseleaf book form or on diskette. The order form is available at all local tax offices and through the Tax Information and Policy Office.

Local tax offices can provide full service and information about the Department's taxes, programs, and forms as well as specific information about your filing situation. All telephone numbers are area code 505.

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  This publication provides general information. It does not constitute a regulation, ruling, or decision issued by the Secretary of the New Mexico Taxation and Revenue Department. The Department is legally bound only by a regulation or a ruling [7-1-60, New Mexico Statutes Annotated, 1978]. In the event of a conflict between FYI and statute, regulation, case law or policy, the information in FYIs is overridden by statutes, regulations and case law. Taxpayers and preparers are responsible for being aware of New Mexico tax laws and rules. Consult the Department directly if you have questions or concerns about information provided in this FYI.